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NeoGenomics reports 42% Test Volume Growth, 26% Revenue Growth and 22% Increase in Adjusted EBITDA for the Third Quarter 2012

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FT. MYERS, Fla., Oct. 31, 2012 /PRNewswire/ -- NeoGenomics, Inc. (NASD OTC QB: NGNM), a leading provider of cancer genetic testing services today reported its results for the third quarter 2012.

Third Quarter 2012 Highlights:

  • 42% Test Volume Growth
  • 26% Revenue Growth  
  • 22% Increase in Adjusted EBITDA
  • Net Loss of ($0.02) per Share Due to Impacts from TC Grandfather Expiration
  • New California Laboratory Location Opened

Revenue for the third quarter 2012 was $14.2 million, a 26% increase over third quarter 2011 revenue.  Test volume increased by 42%.  As a result of the expiration of the Medicare Technical Component (TC) Grandfather Clause on June 30th, average revenue per test declined 12% from Quarter 3 2011 and 7% sequentially from Quarter 2 2012, in-line with the Company's previous guidance on this issue.  The Company estimates that this regulatory change resulted in a reduction in revenue of approximately $1.3 million during the quarter. 

Overall, gross profit increased to $5.9 million, a 16% increase from the third quarter 2011.  The decrease in average revenue per test from Quarter 3 2011 was partially offset by a 6% improvement in average cost per test during this period.  As a result, gross profit margin decreased to 41.5% in the third quarter 2012 from 44.8% in the third quarter of 2011. 

Total operating expenses were $6.6 million, a 31% increase from last year's third quarter, primarily as a result of a $683,000 increase in R&D expenditures related to new test development, as well as incremental personnel, commissions, and bad debt expense related to the increased test volume.  Third quarter G&A expenses included approximately $170,000 in one-time expenses related to the company's move into a larger laboratory facility in Irvine California.  Research and Development expenses included approximately $177,000 of incremental stock-based compensation expense due to the rise in the Company's stock price from the second quarter to the third quarter.  Net loss for the quarter was ($975,000), or ($0.02) per share, versus a net loss of ($143,000), or ($0.00) per share in last year's third quarter.  Despite the net loss, Adjusted EBITDA improved 22% to $842,000 vs. $693,000 in the prior year. 

Douglas M. VanOort, the Company's Chairman and CEO commented, "Although, we are disappointed that Congress did not extend the TC Grandfather clause, we are pleased with our performance in Quarter 3.  Our test volume growth continued the strong trends of previous quarters, even though our sales force spent a significant amount of time in the quarter educating existing clients about the TC Grandfather expiration rather than acquiring new clients.  With this distraction now behind us, we have returned our full focus to growth and performance.  We expect to overcome the impact from this regulatory change within a few quarters through aggressive cost savings, productivity improvements, new product introductions, and continued growth in each of our core laboratories."

Mr. VanOort continued, "Our new test development and growth activities continue to be very exciting.  In the third quarter we further expanded our molecular testing menu by launching several new markers and NeoTYPEä cancer profile panels.  With 29 new molecular tests launched this year, we believe we now have one of the most comprehensive molecular testing menus in the industry.  Molecular services are the fastest growing portion of our business, and we added significant capacity and substantially improved the profitability of this important testing service in the quarter.  We also launched our new 10-color Flow Cytometry platform and became the first national lab to offer this product on a technical component-only basis.  Other new products, including the array-based NeoARRAYä SNP/Cytogenetic profile, which provides more precise characterization of cytogenetic abnormalities, and a digital pathology and immunohistochemistry system are being launched over the next few months.  We also expect to benefit from additional capacity provided by our new California laboratory facility." 

Mr. VanOort concluded by saying, "We remain very optimistic about the strength of our business model.  Our sales pipeline is strong, we are executing plans to gain further efficiencies, and we remain committed to innovation.  By growing our business, lowering our costs and driving innovation, we are becoming America's premier cancer testing laboratory."

Fourth Quarter 2012 Financial Outlook
The Company also issued guidance for the fiscal fourth quarter today and is expecting revenue of $14.3 - $15.0 million and earnings of $0.00 to ($0.01) per share.  The Company also narrowed its previously issued full year revenue guidance to $59 - $60 million for FY 2012.  The Company reserves the right to adjust this guidance at any time based on the ongoing execution of its business plan.  Current and prospective investors are encouraged to perform their own due diligence before buying or selling any of the Company's securities, and are reminded that the foregoing estimates should not be construed as a guarantee of future performance.  

____________________
(1)  Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, other extraordinary or non-recurring charges, such as the costs related to moving our California facility and non-cash stock-based compensation expenses.  See table for a reconciliation to net income.

Conference Call
The Company has scheduled a web-cast and conference call to discuss their Q3 2012 results on October 31, 2012 at 11:00 AM EDT.  Interested investors should dial (800) 374-1317 (domestic) and (404) 665-9940 (international) at least five minutes prior to the call and ask for Conference ID 53483216.  An archive of the conference call will be available at http://us.reg.meeting-stream.com/neogenomicsinc_103112/ for a period of one year from the date of the conference call.  The web-cast may be accessed under the Investor Relations section of our website at http://www.neogenomics.com or http://us.reg.meeting-stream.com/neogenomicsinc_103112/.

About NeoGenomics, Inc.
NeoGenomics, Inc. is a high-complexity CLIA–certified clinical laboratory that specializes in cancer genetics testing, the fastest growing segment of the laboratory industry.  The company's testing services include cytogenetics, fluorescence in-situ hybridization (FISH), flow cytometry, immunohistochemistry, anatomic pathology and molecular genetic testing.  Headquartered in Fort Myers, FL, NeoGenomics has labs in Nashville, TN, Irvine, CA, Tampa, FL and Fort Myers, FL.  NeoGenomics services the needs of pathologists, oncologists, other clinicians and hospitals throughout the United States. For additional information about NeoGenomics, visit http://www.neogenomics.com.    

Interested parties can also access investor relations material from Hawk Associates at http://www.hawkassociates.com or neogenomics@hawk.com and from Zack's Investment Research at http://www.zacks.com or scr@zacks.com.

Forward Looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements.  These forward looking statements involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward looking statements, Actual results could differ materially from such statements expressed or implied herein. Factors that might cause such a difference include, among others, the company's ability to continue gaining new customers, offer new types of tests, and otherwise implement its business plan. As a result, this press release should be read in conjunction with the company's periodic filings with the SEC.

 

NeoGenomics, Inc.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)



ASSETS


September 30,

2012


December 31,

2011











  Cash, cash equivalents

$

2,038

$

2,628






  Restricted Cash


300


500






  Accounts Receivable (net of allowance for doubtful

     accounts of $2,551 and $2,150, respectively)


12,013


7,894






  Other Current Assets


2,770


2,156






TOTAL CURRENT ASSETS


17,121


13,178






PROPERTY AND EQUIPMENT (net of accumulated

   depreciation of $9,202 and $6,653, respectively)


9,234


6,642






INTANGIBLE ASSETS (net of accumulated amortization

of $126 and $-, respectively)


2,856


-






OTHER ASSETS


91


129






    TOTAL

$

29,302

$

19,949






LIABILITIES AND STOCKHOLDERS' EQUITY










CURRENT LIABILITIES

$

16,670

$

11,444






LONG TERM LIABILITIES


3,410


2,608






    TOTAL LIABILITIES


20,080


14,052






STOCKHOLDERS' EQUITY


9,222


5,897






   TOTAL

$

29,302

$

19,949


 

NeoGenomics, Inc.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)









For the Three-Months Ended September 30,


For the Nine-Months Ended

September 30,



2012


2011


2012


2011










NET REVENUE

$

14,202

$

11,320

$

44,973

$

30,591

COST OF REVENUE


 

8,310


 

6,246


 

24,571


 

16,996




GROSS PROFIT


5,892


5,074


20,402


13,595

 

OPERATING EXPENSES









General and administrative


3,929


3,182


11,745


8,801

Research and development


808


125


1,833


416

Sales and marketing


1,839


1,725


5,809


5,162

   Total operating expenses


6,576


5,032


19,387


14,379










INCOME (LOSS) FROM

OPERATIONS


(684)


42


1,015


(784)










INTEREST AND OTHER

INCOME (EXPENSE) - NET


(291)


(185)


(837)


(545)










NET INCOME (LOSS)

BEFORE TAXES


(975)


(143)


178


(1,329)










INCOME TAXES


-


-


-


-










NET INCOME (LOSS)

$

(975)

$

(143)

$

178

$

(1,329)










NET INCOME (LOSS) PER SHARE 

- Basic

$

(0.02)

$

(0.00)

$

0.00

$

(0.03)

- Diluted

$

(0.02)

$

(0.00)

$

0.00

$

(0.03)










WEIGHTED AVG NUMBER

OF SHARES OUTSTANDING

- Basic


45,175


43,104


44,944


42,570

- Diluted


45,175


43,104


48,226


42,570


 

NeoGenomics, Inc.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)





For the

Nine Months

Ended

September 30,

2012


For the

Nine Months

Ended

September 30,

2011






NET CASH (USED) IN OPERATING ACTIVITIES

$

(493)

$

(1,170)






NET CASH (USED) IN INVESTING ACTIVITIES


(3,300)


(338)






NET CASH PROVIDED BY FINANCING ACTIVITIES


3,203


3,060






   NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(590)


1,552






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


2,628


1,097






CASH AND CASH EQUIVALENTS, END OF PERIOD

$

2,038

$

2,649






SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:










Interest paid

$

809

$

519






 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND  FINANCING ACTIVITIES:






     Purchase of licenses

$

1,945

$

-

     Equipment leased under capital lease and equipment loans

$

2,845

$

1,255


 

NeoGenomics, Inc.

 

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA AND ADJUSTED EBITDA

(Unaudited, in thousands)









For the Three-Months Ended

September 30,


For the Nine-Months Ended September 30,



2012


2011


2012


2011










Net loss (Per GAAP)

$

(975)

$

(143)

$

178

$

(1,329)










Adjustments to Net Loss:









   Interest expense (income), net


291


185


837


545

   Income tax expense


-


-


-


-

   Depreciation and amortization


1,000


521


2,675


1,484

 EBITDA


316


563


3,690


700










Further Adjustments to EBITDA:

  Other non-recurring items


170


-


170


-

  Non-cash stock-based

     compensation


356


130


699


379

 Adjusted EBITDA (non-GAAP)

$

842

$

693

$

4,559

$

1,079

 

Non – GAAP Adjusted EBITDA Definition

 

"Adjusted EBITDA" is defined by NeoGenomics as net income (loss) from continuing operations before (i) interest expense, (ii) tax expense and therapeutic discovery tax grants, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation and warrant amortization expense and (v) other extraordinary or non-recurring charges, such as the costs related to moving our California facility. NeoGenomics believes that Adjusted EBITDA provides a more consistent measurement of operating performance and trends across reporting periods by excluding these cash and non-cash items of expense not directly related to ongoing operations from income. Adjusted EBITDA also assists investors in performing analysis that is consistent with financial models developed by research analysts.

 

Adjusted EBITDA as defined by NeoGenomics is not a measurement under GAAP and may differ from non-GAAP measures used by other companies. There are limitations inherent in non-GAAP financial measures such as Adjusted EBITDA because they exclude a variety of charges and credits that are required to be included in a GAAP presentation, and do not therefore present the full measure of NeoGenomics recorded costs against its net revenue. Accordingly, investors should consider non-GAAP results together with GAAP results in analyzing NeoGenomics financial performance.

 

 

NeoGenomics, Inc.

 

Supplemental Information on Customer Requisitions Received and Tests Performed

(Unaudited, in thousands, except test and requisition data)










 

 

For the

Three-Months

Ended

September 30, 2012

 

 

For the

 Three-Months

Ended

September 30, 2011

 

 

 

% Inc

(Dec)


 

 

 

For the

Nine-Months

Ended

September 30, 2012

 

 

 

For the

Nine-Months

Ended

September 30, 2011

 

 

 

% Inc

(Dec)









Requisitions Rec'd (cases)

18,307

12,857

42.4%


53,802

34,995

53.7%

Number of Tests Performed

28,315

19,977

41.7%


84,093

53,731

56.5%

Avg. # of Tests / Requisition

1.55

1.55

0.0%


1.56

1.54

1.8%









Total Testing Revenue

$ 14,202

$ 11,320

25.5%


$  44,973

$ 30,591

47.0%

Avg Revenue/Requisition

$ 775.77

$ 880.47

(11.5)%


$ 835.90

$ 874.15

(4.4)%

Avg Revenue/Test

$ 501.58

$ 566.66

(11.9)%


$ 534.80

$ 569.33

(6.1)%


 

SOURCE NeoGenomics, Inc.

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